Australians are paying too much to send text messages, so the competition watchdog is looking to regulate the wholesale costs of texting for the first time.

Mobile networks can carry up to 430 text messages for the same capacity as one minute of voice calling, yet carriers charge consumers about a third of the cost of a minute of voice for texts.

Network owners were "profiteering" from high wholesale texting charges, according to the Australian Competition and Consumer Commission, which now wants to regulate the "terminating fee" – the wholesale cost of sending text messages between mobile networks.

Text messages don't have to cost so much, according to the ACCC.

"There are indications that SMS termination rates have not changed for many years, commercial negotiations have been unsuccessful in lowering these rates, and that SMS termination prices are inefficiently high," the ACCC's Mobile Terminating Access Service review found.

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The cost of texting was high compared to charges of about 90¢ a minute for voice calls, according to some pre-paid plans.

Termination rates were paid whenever a text message was sent from one network to another. For example, when an Optus customer texts a Telstra customer, Optus must pay Telstra a fee for "terminating" the text on Telstra's network.

The ACCC currently regulates the price mobile operators must pay if a customer calls another network – 6¢ a minute and falling to 3.6¢ a minute next year – but has never regulated SMS prices.

Telstra, Optus and Vodafone Hutchison Australia could not bargain lower terminating fees out of each other and retail prices would remain "inefficiently high" if wholesale prices were not regulated, the ACCC concluded.

"This is likely to mean that where unlimited SMS services are offered, the prices for other elements of the bundle will be unlikely to decrease, and that where SMS are charged per message, these prices will remain above costs. Further, the ability of some [mobile network operators] and [retailers] to effectively compete in the retail market may be constrained if SMS termination services are not declared."

While many consumers can avoid texting costs by using internet-based messaging services, these were still not available to the large number of Australians who did not have a smartphone and were only available if both sender and receiver had the same apps.

The ACCC reviewed 115 mobile plans and found while many offered unlimited text messages, these required consumers to commit to one or two-year plans.

8 comments

Telcos over price for everything. Limit on this, cap on that. Plans deliberately complex and confusing. Allowing data plans to run over so called caps and then the use age cost trebles. Optus chief was candid the other week about what a rip off it all is. Telstra is a joke and lucky for them their so called competition is worse.

Commenter

Ferris

Date and time

December 16, 2013, 11:43AM

Everything costs more in Australia..................

Commenter

Paolo

Location

Newcastle

Date and time

December 16, 2013, 1:22PM

Does anyone even use SMS anymore? It's so 1990's. All my family and friends either use FB, iMessage or What's App. I can't remember the last time Isent a txt.

Commenter

RockDJ

Location

Surry Hills

Date and time

December 16, 2013, 3:56PM

What are they? This Dinosaur has never heard of them. Please respond so that many more like me can benefit. Thank you.

Commenter

sensible

Date and time

December 16, 2013, 9:04PM

The ACCC are so far behind on this. There are so many apps to give you free messaging from facebook, iMessage, What's App, line, kakao and countless others. Telcos are giving unlimited txts before all they disappear completely. The horse has bolted.

I produce cloud software that uses texts to send out information, so we cannot use any of the apps people are talking about because our customers are a diverse lot. We have to buy the SMSs wholesale and then on-sell and because we pay such a high price we cannot compete with foreign software who generally give their SMS functionality away for free. The sooner the Telcos are brought into line the better, from my point of view

Commenter

jj

Date and time

December 17, 2013, 7:11AM

Just compare the cost of mobile usage in Australia with a country like Norway - a very expensive country indeed - and you will find that calls and sms cost around 3 times as much in Australia. Someone is being ripped off through ignorance.

BTW, the Australian population is concentrated at a few points with very few living any distance from places - the vast majority of calls are over a few kilometres.